What Is a Project Portfolio?A project portfolio is a collection of projects, programs and processes that are managed together and optimized for the financial and strategic goals of an organization. A portfolio can be managed at either the functional or the organizational level. Show
Unlike a project, which has a defined end goal or deliverable, a portfolio represents a more strategic planning commitment to continuously optimizing the allocation, prioritization and scheduling of resources across many projects. What Is Project Portfolio Management? (PPM)Project portfolio management (PPM) is the analysis and optimization of the costs, resources, technologies and processes for all the projects and programs within a portfolio. Project portfolio management is typically carried out by portfolio managers or a project management office (PMO). The key focus of PPM is to make sure that all the outcomes in the portfolio support the strategic goals and business objectives of the organization. The portfolio manager or PMO does this through business analysis, reviewing budgets and forecasting while minimizing risk and managing stakeholder expectations. Project portfolio management tools (PPM tools) are often used to collect and analyze that data to ensure that their project portfolio is aligned with the overall strategic planning and goals of the organization. ProjectManager has powerful, yet intuitive, tools for managing project portfolios. Track all your projects with a customized dashboard, manage your portfolio on a roadmap, even allocate resources across your projects. It’s easy to do all this and more with ProjectManager. Try it free. ProjectManager’s portfolio dashboard is one of its many PPM tools. In the hierarchy of business management, project portfolio management is the link between project management, which we will define briefly below, and enterprise management, which deals with the overriding vision, mission and strategic planning of the organization. To understand where project portfolio management and project management differ, we must first define each and explore the areas where they diverge. Project management is, quite simply, the management of a project. A project is a temporary endeavor that results in a product or service. It has a beginning and an end. Project goals are defined, and tasks are broken down into a schedule. Cost and budgets are set; resources are assigned, and stakeholders are reported to. Project portfolio management, on the other hand, is a higher level approach that orchestrates, prioritizes and analyzes the potential value of many projects and programs in a portfolio to manage them simultaneously and optimize resource management. The goal of the portfolio management process is to manage and leverage the life cycle of investments, initiatives, programs, projects and outcomes to best reach the overall goals and objectives of an organization. Therefore, project management is a subset of project portfolio management. It leads to the ultimate objective, which is meeting the strategic goals of the organization. The Project Portfolio Management ProcessThere are five basic project portfolio management steps: 1. Define Business ObjectivesBefore you start thinking about portfolio management, you’ll need to understand your organization’s business objectives and strategic goals. The idea is that your project portfolio aligns with the strategic planning of your organization, so you’ll need to check if its financial objectives and customer value are good enough for your organization. As a project portfolio manager you’ll need to reach an agreement about the strategic goals of the project portfolio with stakeholders, and then proceed to establish valuation criteria for project selection. 2. Collect Project Ideas for Your PortfolioOnce you’ve defined your portfolio’s strategic goals it’s time to start building it. To do so, you’ll need to start collecting projects. Those could be in-progress projects or project ideas that are similar enough to be managed simultaneously. Gather project management data and prepare the valuation criteria to choose the best. 3. Select the Best Projects for Your PortfolioTo determine which are your best projects for your portfolio, you’ll need to do a cost benefit analysis and use your valuation criteria. This valuation criteria will measure the amount of value that each project brings into the portfolio. There are a variety of aspects that can go into the project selection scoring criteria, such as the payback period, net present value, or risk level. 4. Validate Project Portfolio FeasibilityNow that you’ve chosen the projects that are the best fit for your portfolio, it’s time to do a feasibility study that takes into account all the financial risks, capacity planning and resource management constraints. 5. Execute and Manage your Project PortfolioNow you’ll need to coordinate the execution of the projects and programs in your portfolio simultaneously by working with project and program managers. What Does a Project Portfolio Manager Do?Project portfolio managers oversee the management of the project portfolio which includes approving or rejecting project and program ideas. They are responsible for getting a return on investment and meeting the goals and objectives of their organization. The project portfolio manager can be tasked with managing one or more portfolios. The job is done by working with various portfolio management tools, financial algorithms and models to help the project portfolio manager align the projects to strategic goals of the organization. They are further guided by a set of valuation criteria and standards that help them through the portfolio management process. Project portfolio managers are often involved with the PMO, which also sets the processes and standards for the portfolio. The project portfolio manager and PMO can also provide direction on what project management methodologies are used, whether traditional waterfall or an agile framework, when managing the project. 5 Project Management Processes for PPMProject portfolio management requires a balance of resources, time, skills, budgets, risk mitigation and running the projects in the portfolio frugally and expediently without sacrificing quality. Managers do this through the use of five key project management processes.
Project Portfolio Management SoftwareProject portfolio management software is a tool that’s designed to centralize the management and maintenance of a project management portfolio. With the increasingly large amount of data now associated with a single project, let alone a portfolio, the use of portfolio management software has become a necessity for project managers. Portfolio managers and project management offices (PMOs) use portfolio management software to gather data, analyze information and use the results to better manage the portfolio and achieve the goals of their organization. Desktop vs. Online Project Portfolio Management SoftwareManaging a portfolio is like keeping many plates spinning at once. To keep up, you need robust project portfolio management software. The question is, what kind should you go for? In terms of features, desktop and online software applications, at this point, are on an even playing field. It depends on the product, of course; but for the most part, both offer similar PPM tools. The major differences are price, security and speed. For example, desktop portfolio management software tends to cost more and require a license for each team member to use. This can add up. Pros of Desktop PPM SoftwareSecurity on a desktop, even one linked to an office intranet, is likely better than many online services. Performance for a cloud-based software depends on your internet connection, and if your service goes out you’re out of luck. This, obviously, is not a concern for desktop apps. Pros of Cloud-Based PPM SoftwareOnline apps are monopolizing the project management sector, and for good reason; they excel at connectivity, collaboration and real-time data. So long as your team has an internet connection, they can use the tool—no matter where they are. This creates a platform where even distributed teams can work together anywhere and at any time. As teams update their status, you get live data that is more accurate and timely to help make effective decisions. How to Use Portfolio Management SoftwareProjects are hard enough to manage, and a portfolio of them even more so. It’s many times more complex and requires robust project portfolio software. In this section, we will use ProjectManager as an example on how to use portfolio management software. 1. Set Goals & ObjectivesHaving goals and objectives for your project portfolio is important, as it gives portfolio managers a target to hit when trying to increase their return on investment and keep risk at bay. Start by writing down the goals and objectives for each project in your portfolio. There will likely be a number of detailed project management documents describing these projects. Attach them to our portfolio management software, which has unlimited file storage. 2. Group Related ProjectsGrouping projects in a portfolio and creating reports around them collectively, rather than individually, gives portfolio managers the data they need to make better business decisions about costs, resources and more. Keep all the projects in your portfolio together in our overview section. Compare status, budget and more of everything in your portfolio, all in one place. Now you can use resource allocation to boost one of the projects that might be underperforming. 3. Create MilestonesMilestones mark the end of one major phase and the beginning of another. They can be easily inserted on the Gantt chart, where they’re represented by a diamond symbol. Set milestones and break up your projects into more manageable parts. This boosts the team’s morale by giving them a series of successes as they work through their tasks. Managers can use milestones as a means to measure progress. 4. Set DependenciesTasks are not all the same. Some can’t start until another has finished, or must start or finish at the same time as another. It’s important to know which of your tasks are dependent to keep the portfolio healthy. Link dependent tasks by dragging one to the other to avoid blocking teams. This prevents these dependent tasks from falling through the cracks during the execution of the project. Once you have set dependencies, you can filter by critical path. 5. View RoadmapWhen managing a portfolio, it’s important to keep the big picture in sight. Without it you can easily get lost in the weeds and fall behind schedule. Keep goal-minded with the roadmap tool, which places all the projects in your portfolio on one Gantt chart. See every project on a timeline and quickly discern if there are any conflicts and resolve them before they interfere with the goals and objectives of your organization. 6. Balance ResourcesWorkload represents what your team has been assigned, in terms of their tasks. If you overburden one team member, they’ll not be as productive and morale will suffer. See the planned effort for every team member working across your portfolio in a color-coded chart that shows who has too many hours assigned and who has too few. Then you can reallocate their hours right from the same page, improving efficiencies. 7. Track Portfolio ProgressA dashboard is a tool that graphically depicts various project metrics, so you can see how your project is performing. It’s a high-level view that can alert you of issues to address before they become problems. Use our cloud-based dashboard to see your portfolio’s progress in real time. Mini-dashboards appear for each project that offer important metrics such as progress, budget and costs. You can also customize the dashboard to show only certain projects, and you can create reports based on projects that are filtered in this manner. 8. Analyze & Present ReportsStatus reports are a way to measure the current state of your project. They communicate important data to stakeholders, keeping them updated. They also maximize portfolio performance. Use the built-in reporting tool for a deep dive into project data to see progress and measure performance. A portfolio status report is perfect for stakeholder presentations. If they have questions, the status report can be filtered to bring up just the information they’re interested in. 9. Collaborate with StakeholdersCollaboration means working together to increase productivity. This can be at the task level for teams, or on an executive level. Ideally, it’s practiced throughout every department in an organization. Project portfolio managers have the tools they need to stay in touch with every project manager leading a project in your portfolio. Get in touch with anyone by tagging them in a comment. They’ll get an email notification. Alerts can be customized, so your inbox doesn’t get cluttered. Project Portfolio Management ToolsWith software moving from the desktop to the cloud, project portfolio management grew more efficient and effective. Some of the features that serve portfolio managers are the following:
Project Portfolio Management Roles & HierarchyThe following is a hierarchical listing of the team members involved in managing and executing a project portfolio.
Which Industries and Organizations Benefit from PPM?Any industry that is working on multiple projects at the same time benefits from the discipline of project portfolio management. Obviously, that’s a lot of industries and organizations. Some of the industries and organizations that are reaping the rewards from using project portfolio management include:
Project Portfolio Management (PPM) Key TermsThe following is a mini-glossary of project portfolio terms that have been used in this guide.
All these factors and more make it clear that project portfolio management is a methodology that can serve any organization with a portfolio of projects. And, with ProjectManager, you have the best PPM tool in the market to fully take advantage of all these business benefits. Sign up for your free 30-day trial and start managing your portfolios better. Start My Free Trial What is the goal of project portfolio management?Project portfolio management sets out a methodology used to predict potential problems, review progress towards operational goals, manage budgets, and address stakeholder concerns, allowing project managers to then follow up with precision execution.
How does strategic portfolio management relates to project management?SPM is primarily concerned with choosing the right projects in accordance with a pre-established set of business drivers. Strategic Portfolio Management has a broader focus on business strategy and enterprise-wide integration than project management, which is more typically about doing the right project.
Which of the following is the key aspect of project portfolio management?A key element of project portfolio management is understanding of the relationship of work, where projects reside, and how they operationalize strategy.
What goals does the project portfolio management addresses in an Organisation?The goal of portfolio management is to align projects with strategy, to maintain a balance of various project types within the portfolio, and to ensure that the portfolio fits with resource capability so that the organisation can sustain the maximum value from project investments.
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